Although Europe and American debt issues are fundamentally different in cause and severity, could United States budget reform, or lack thereof, bring the country to the same crossroads as the European Union?

Michael Sivy of Time.com acknowledges that Europe's troubles are the result of past debt, "some of which is now compounding at such high interest rates that for all practical purposes it can never be paid back. Call it a problem of arithmetic. The U.S., by contrast, is still years away from a debt crisis of the same magnitude, but it is having great difficulty getting its current budget under control. America's problem, therefore, is not mathematical but political."

For the U.S., so far so good...To be sure, the U.S. national debt is significant, but in relation to economic output it is a far cry from disastrous levels. U.S. debt is nearly 100% of GDP while, for example, Italy is at 120% of GDP, but roughly one third of U.S. debt is owed to itself (from one sector of the government to another), so it "doesn't really count."

Furthermore, Italy's interest rate climbed above 7%, to the level of junk bonds, which increases Italy's chance of default. Because investors are more confident in America's ability to repay debts, the U.S. enjoys a relatively stable borrowing rate below 3%.

What's the budget problem?So, what can America do wrong from here that could bring it to the same circumstances and fate as Europe? According to Sivy, our budget is out of control.

One of the biggest budget issues to tackle, the biggest cause of long-term deficits, is the growth of entitlements, such as Social Security, which "is the easiest to stabilize."

"The real intractable problem continues to be health care, including Medicare, Medicaid, Veterans Benefits and such. With rising medical costs and an aging population, it is hard to see what the solution would be, especially since recent health-care legislation has not slowed rising costs, and the prospect of reopening the health-care debate is hardly encouraging. Although we still have plenty of time to fix things, the political challenges look daunting indeed."

He adds that given the aging Baby Boomers and record life expectancy, the U.S. has about 10 to 12 years to figure out this problem before its debts reach Italian levels (under what the Congressional Budget Office calls the Alternative Fiscal Scenario).

Are you worried?

Investing ideasHigh debt levels can harm the U.S. economy, and they can also do damage to your portfolio. That's why we wanted to create a list of debt-free companies that you can use to start your own analysis.

To create this list, we started with the 200 largest debt-free companies. We collected data on levered free cash flows, and identified the names that are undervalued relative to their enterprise value.

These companies have no debt, and they appear to be undervalued relative to their cash flows -- should any of these names be on your radar?